GWG Holdings, Inc. Announces Second Quarter Financial Results

Aug 11, 2015, 08:15 ET from GWG Holdings, Inc.

MINNEAPOLIS, Aug. 11, 2015 /PRNewswire/ -- GWG Holdings, Inc. (NASDAQ: GWGH) ("GWG" or the "Company"), a specialty finance company and leader in the life insurance secondary market, today announced financial results for the three and six months ending June 30, 2015.

Highlights

GWGH reports the following highlights:

  • Quarterly revenue growth of 56% and 131% compared to the three and six month periods one year ago.
  • Portfolio growth of $51.3 million in face value to over $806 million in face value of policy benefits, net of matured policy benefit payments as of June 30, 2015.
  • Direct policy-sourcing efforts grew significantly, with 28% of the life insurance policies in the Company's origination pipeline coming from direct sources as of August 3, 2015.
  • Financial professionals approved to source life insurance policies for the Company increased to over 850 as of June 30, 2015.
  • Financial professionals approved to sell the Company's $1,000,000,000 high yield, non-correlated L Bond Offering increased by 1,700, bringing the total to approximately 3,100 as of August 3, 2015.
  • Total liquidity position of $82.0 million – cash, policy benefit receivables plus senior lending facility surplus – was available for life insurance policy acquisitions and premium payments as of June 30, 2015.

Q2 Results Call

The Company will host an informational call on Tuesday, August 11, 2015, at 5 p.m. EDT to discuss the quarterly results.

Date:

Tuesday, August 11, 2015

Time:

5 p.m. EDT

Dial In:

(844) 423-9895 (domestic) / (716) 247-5865 (international)

Passcode:

91904457

Webcast:

Q2 2015 GWG Holdings, Inc. Earnings Conference Call

Pre-Registration:

Please dial in at least 10 minutes in advance to register for the call.

Three Months Ended June 30, 2015

Gross revenue for the quarter increased 56% versus the same period in 2014 to $8.6 million, a result driven by the recognition of $0.7 million gross policy benefits and $14.0 million of fair value gain in the quarter, which was related both to an increase in price competition experienced in the life insurance secondary market and the increase in the Company's portfolio of life insurance policies net of maturities. Total expenses for the quarter ending June 30, 2015 were $12.0 million versus $9.4 million for the same period one year ago. The increase was driven by increased interest expense, continued investment in the Company's marketing, branding and technology infrastructure as well as increased compensation and benefits costs related to the Company's overall growth objectives.

Total net loss attributable to common shareholders was $1.9 million or $0.32 per both basic and fully diluted share, for the three months ended June 30, 2015, compared to a net loss of $2.7 million, or $0.59 per basic and fully diluted share, for the same period in 2014. The weighted average basic and fully diluted shares outstanding for the quarter was 5.9 million.

"All of the key drivers of long term growth – life insurance portfolio growth, expansion of direct policy origination, increased capital sources and awareness of the life settlement transaction among the senior population – were intact and evident in this quarter's performance," said William Acheson, GWG Holdings, Inc.'s Chief Financial Officer. "We continue to invest in high yield assets backed by investment-grade credits while providing owners of life insurance an unmatched value proposition, a true win-win."

"We continue to make progress in positioning GWG as the premier provider of value-added products and services to the financial advisor community by developing a vertically integrated specialty finance company to address a growing opportunity in the life insurance secondary market," said Jon Sabes, GWG Holdings, Inc.'s Chief Executive Officer. "We have made the investments and developed the strategies that enable consumers to recycle their unwanted life insurance into productive non-correlated investment assets. This unique business model provides seniors with valuable post-retirement financial solutions and investors with yield derived from assets whose performance is not tied to the stock market, commodities, or real estate. We are on the threshold of creating something great, which we expect will lead to explosive growth for the investors of GWGH."

A Powerful Origination Model

"We have continued to sharpen our service offerings and marketing tools available to financial professionals who market our products and services, said Michael Freedman, President of GWG Holdings. "GWG's Appointed Agent Program empowers financial professionals to bring the secondary market's value proposition directly to consumers owning life insurance and we have made significant progress in our direct-to-consumer lead generation and origination protocols and practices. These key factors produce a powerful origination model that we believe will deliver consistent growth and value to all of our stakeholders."

Life Insurance Portfolio Highlights

Life Insurance Portfolio Summary

Total portfolio face value of policy benefits

$

806,274,000

Average face value per policy

$

2,567,000

Average face value per insured life

$

2,819,000

Average age of insured (yrs.) *

82.9

Average life expectancy estimate (yrs.) *

6.56

Total number of policies

314

Number of unique lives

286

Demographics

68% Males; 32% Females

Number of smokers

4

Largest policy as % of total portfolio

1.24

%

Average policy as % of total portfolio

0.32

%

Average Annual Premium as % of face value

3.34

%

* Averages presented in the table are weighted averages.

Distribution of Policy Benefits by Current Age of Insured

Min Age

Max Age

Policy Benefits

Weighted Average Life Expectancy (yrs.)

Distribution

90

94

$

47,497,000

3.02

5.89

%

85

89

236,573,000

4.83

29.34

%

80

84

278,567,000

6.92

34.55

%

75

79

190,793,000

8.30

23.67

%

70

74

42,437,000

9.90

5.26

%

66

69

10,407,000

7.07

1.29

%

Total

$

806,274,000

6.56

100.00

%

Distribution of Policies by Current Age of Insured

Min Age

Max Age

Policies

Weighted Average

Life Expectancy (yrs.)

Distribution

90

94

22

3.02

7.01

%

85

89

99

4.83

31.53

%

80

84

103

6.92

32.79

%

75

79

61

8.30

19.43

%

70

74

20

9.90

6.37

%

66

69

9

7.07

2.87

%

Total

314

6.56

100.00

%

Life Insurance Portfolio Cash Flow vs Premium Payments

Quarter End Date

Portfolio

Face Amount

12-Month

Trailing

Benefits Collected

12-Month

Trailing Premiums Paid

12-Month

Trailing

Benefits/Premium

Coverage Ratio

March 31, 2012

$

482,455,000

$

4,203,000

$

14,977,000

28.06

%

June 30, 2012

489,255,000

8,703,000

15,412,000

56.47

%

September 30, 2012

515,661,000

7,833,000

15,837,000

49.46

%

December 31, 2012

572,245,000

7,350,000

16,597,000

44.28

%

March 31, 2013

639,755,000

11,350,000

18,044,000

62.90

%

June 30, 2013

650,655,000

13,450,000

19,182,000

70.11

%

September 30, 2013

705,069,000

18,450,000

20,279,000

90.98

%

December 31, 2013

740,648,000

16,600,000

21,733,000

76.38

%

March 31, 2014

771,940,000

12,600,000

21,930,000

57.46

%

June 30, 2014

784,652,000

6,300,000

22,598,000

27.88

%

September 30, 2014

787,964,000

4,300,000

23,121,000

18.60

%

December 31, 2014

779,099,000

18,050,000

23,265,000

77.58

%

March 31, 2015

754,942,000

46,675,000

23,786,000

196.23

%

June 30, 2015

806,274,000

47,125,000

24,348,000

193.55

%

For the dates set above, the table illustrates the total face value of policy benefits owned, the trailing twelve months of life insurance policy benefits recognized and premiums paid on our portfolio. The trailing 12-month benefits/premium coverage ratio indicates the ratio of policy benefits recognized to premiums paid over the trailing 12-month period from our portfolio of life insurance policies.

About GWG Holdings, Inc.

GWG Holdings, Inc. (NASDAQ: GWGH) is a specialty finance company and leader in the life insurance secondary market. GWG, through its subsidiaries, purchases life insurance policies from seniors who no longer want, need or can afford their policies. Since 2006, GWG has purchased more than $1.7 billion in life insurance policy benefits and paid seniors over $291 million for their policies – approximately $274 million more than the surrender or lapse value offered by insurance carriers. GWG's strategy is to originate and manage a diverse portfolio of life insurance policies that generate yields that exceed the costs to finance the policies (in aggregate). GWG finances the purchase and maintenance of a portfolio of policies primarily through a fixed income alternative investment product that is offered through independent broker-dealers and registered investment advisors nationwide. GWG's goal is to generate financial returns for GWG's investors and shareholders while providing valuable post-retirement financial solutions to seniors.

For more information about GWG, email info@gwglife.com or visit www.gwglife.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "would," "target" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about our estimates regarding future revenue and financial performance, our ability to avail ourselves of market opportunities, the efficacy of our business model, our ability to successfully execute on our business model and our understanding of the recognition of our investment product and service offerings to investors and insured persons, respectively. We may not actually achieve the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the expectations disclosed in the forward-looking statements we make. More information about potential factors that could affect our business and financial results is contained in our filings with the Securities and Exchange Commission, specifically including our registration statement on Form S-1 filed on March 13, 2015 and May 5, 2015, and any amendments and post-effective amendments thereto. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend, and undertake no duty, to release publicly any updates or revisions to any forward-looking statements contained herein.

GWG HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2015

December 31, 2014

(unaudited)

ASSETS

Cash and cash equivalents

$

38,198,189

$

30,662,704

Restricted cash

7,923,190

4,296,053

Policy benefits receivable

2,500,000

1,750,000

Investment in life settlements, at fair value

301,498,527

282,883,010

Other assets

6,623,561

3,478,762

TOTAL ASSETS

$

356,743,467

$

323,070,529

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES

Revolving credit facility

$

65,011,048

$

72,161,048

Series I Secured Notes payable

24,347,531

27,616,578

L Bonds

223,118,514

182,782,884

Interest payable

11,593,220

11,128,519

Accounts payable and accrued expenses

2,071,879

1,718,009

Deferred taxes, net

6,525,336

5,273,555

TOTAL LIABILITIES

332,667,528

300,680,593

STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

(par value $0.001; shares authorized 40,000,000; shares outstanding 2,746,412 and 2,738,966; liquidation preference of $20,598,000 and $20,542,000, respectively)

20,559,823

20,527,866

COMMON STOCK

Common stock (par value $0.001: shares authorized 210,000,000; shares issued and outstanding is 5,933,041 and 5,870,193 on June 30, 2015 and December 31, 2014, respectively)

5,933

5,870

Additional paid-in capital

16,900,193

16,257,686

Accumulated deficit

(13,390,010)

(14,401,486)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

24,075,939

22,389,936

TOTAL LIABILITIES & EQUITY (DEFICIT)

$

356,743,467

$

323,070,529

GWG HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended

Six Months Ended

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

REVENUE

Gain on life settlements, net

$

8,473,886

$

5,484,889

$

25,257,295

$

11,001,094

Interest and other income

90,380

6,380

139,676

13,747

TOTAL REVENUE

8,564,266

5,491,269

25,396,971

11,014,841

EXPENSES

Employee compensation and benefits

2,144,725

1,178,819

3,872,642

2,147,564

Legal and professional fees

642,931

419,337

1,166,184

826,339

Interest expense

7,322,347

6,608,043

14,498,881

12,934,591

Other expenses

1,881,321

1,188,479

3,415,060

1,865,784

TOTAL EXPENSES

11,991,324

9,394,678

22,952,767

17,774,278

INCOME (LOSS) BEFORE INCOME TAXES

(3,427,058)

(3,903,409)

2,444,204

(6,759,437)

INCOME TAX EXPENSE (BENEFIT)

(1,176,643)

(1,316,712)

1,432,728

(2,271,570)

NET INCOME (LOSS)

$

(2,250,415)

$

(2,586,697)

$

1,011,476

$

(4,487,867)

(Income) loss attributable to preferred shareholders

344,847

(101,271)

698,003

(226,984)

INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(1,905,568)

$

(2,687,968)

$

1,709,478

$

(4,714,851)

NET INCOME (LOSS) PER SHARE

Basic

$

(0.32)

$

(0.59)

$

0.29

$

(1.03)

Diluted

$

(0.32)

$

(0.59)

$

0.21

$

(1.03)

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

5,876,618

4,562,000

5,873,423

4,562,000

Diluted

5,876,618

4,562,000

7,987,923

4,562,000

SOURCE GWG Holdings, Inc.



RELATED LINKS

http://www.gwglife.com